It’s been a rough few months for the legal industry. Law schools have taken a beating for their inflated costs and potentially inflated post-graduation employment figures. Additionally, the number of LSAT test-takers seems to have fallen significantly. Here’s a quick round-up of the latest big stories on law school:

Law School Jobs Data
The first lawsuit pitting law school graduates against law schools over the potentially fraudulent representation of post-graduate employment numbers has recently been concluded (not guilty, surprise-surprise), but the furor and fallout doesn’t seem likely to abate any time soon. More lawsuits seem imminent. However, it also seems the lawsuits and disillusionment have begun to spur change. Many law schools are modifying the graduate jobs data they supply, and The American Bar Association’s Section of Legal Education and Admissions to the Bar is taking steps to improve the data they release. While these are the first baby steps, the hope is that they will continue, providing greater transparency and insight for prospective law students. For more, check out this article.

Is the Law School Tuition Bubble About to Burst?Early indications from U.S. News and World Report 2012-13 data indicate that law school tuition rates – which have been rising astronomically in the last decade – may finally be headed in the other direction, which is good news for aspiring lawyers. Hopefully the trend continues, and leads to similar downturns for other graduate programs and undergraduate education. To read a thorough analysis of the latest information, click here.

“Legal diplomas are apparently losing luster.”
This is the first line of a recent New York Times article on law schools. Part of the evidence presented in the article was a precipitous drop in LSAT administrations. We found this odd, so we checked out the data ourselves. Here’s a snapshot of official numbers from LSATs given over the last 25 years that led the Times to speculate that “The decline reflects a spreading view that the legal market in the United States is in terrible shape”:

Upon first glance, the decrease in LSAT administrations from 2010 to 2012 is pretty shocking. What is questionable, however, is the assertion that the legal profession has somehow become less attractive. That assertion requires an assumption that there is a direct correlation between LSAT administration numbers and the attractiveness or health of the law profession. We could spend days (and many thousands of words) deconstructing this one fallacy…but we won’t. I think you get the picture. Of more interest to us is interpreting these statistics.

Our contention is that while the LSAT numbers are down, this doesn’t say the law degree is any less valuable. In fact, given the drop, it may be even more valuable. Here’s why:

A more extensive look at the table reveals the current numbers might have been inflated in the first place. Notice the incongruous jump in administrations from 2001-2003: 33.4%!

Notice as well the relatively sizable jump from 2008 to 2010 of nearly 20% that immediately preceded the latest decline. Between those two increases alone you’re looking at over a 50% jump in test administrations from the 2000 numbers. Do you know what both of those two periods had in common? That’s right, relatively significant economic recessions.

Going back farther, one sees a similar jump from 1988-91, after, you guessed it, another recession (from the famed “Black Monday” of 1987). But these increases gradually came back down over the next decade. The inflated numbers spawned by the downturn of the early 2000’s didn’t have a real chance to tick back down (as they did after the 1987 recession) because we bumped right into another one a few years later. Consequently, the preposterously inflated LSAT administration numbers of the early 2000’s recession were further bloated by the late 2000’s recession increase. If anything, it seems like the law industry has a realistic normal rate of around 100,000 LSAT administrations per year for the last two-plus decades, which recessions periodically inflate. The most recent data seems to indicate that we’re simply going back to that norm, which means a normal valuation of the law degree.

What Does This Mean to You?

If you’re considering a career in law it would be smart to start thinking like a LSAT test-taker (and probably a lawyer) and looking for the assumptions in arguments you find in articles published about this trend. It would also be smart to start considering your application plan, including LSAT test prep.